True, Fair Competition Needed In Cable Industry

OTHER VIEWPOINTS

January 2, 1998

Cable television rates are soaring - by 10 percent or more in New York, Memphis, Indianapolis and San Diego - despite congressional attempts to inject competition into this monopoly-ridden industry. The Federal Communications Commission, four of whose five members are new, needs to listen carefully to cable's critics.

The 1992 and 1996 Telecommunications Acts were supposed to lure satellite broadcasters, telephone companies and "wireless" cable operators into the cable industry. Yet such companies account for only about 10 percent of the market. Part of the problem is technological - satellite broadcasters do not yet have the capacity to offer customers local sports and news. But part of the problem reflects weak laws and regulation.

The commission has permitted too much concentration. Time Warner and TCI serve about half the nation's cable customers and also own many of the popular cable programs and channels, like HBO and CNN. The 1992 act requires the large cable operators to make these programs available to their rivals on commercially fair terms.

But Gene Kimmelman of Consumers Union and Matthew Oristano of the Wireless Cable Association testified before the commission that cable had found ways to thwart Congress's will.

The least promising antidote to soaring rates is price controls. Such controls have done more to squelch innovation and investment in cable systems than to protect consumers. When controls are lifted - as eventually they must be - prices promptly make up for all lost ground. The better answer is tough-minded regulations that pry open the cable market to competition by guaranteeing that cable's competitors gain access to popular programs.

The commission could start by denying Rupert Murdoch's plan to turn over his licenses to broadcast television shows from satellites to a service owned by large cable operators rather than to a satellite service owned by their competitors. Satellite-based service is positioned to beat cable, but not if it becomes the handmaiden of cable.

The commission should also, with the help of Congress if necessary, preserve the right of cable's competitors to license regional sports channels owned by cable operators. Without sports, cable's rivals will not survive. Aside from granting access to sports, the commission should examine how it is priced.

Some studies suggest that the cost of broadcasting sports is driving up cable fees. The commission should consider requiring cable operators to price sports channels separately, thereby giving customers options to save money.

Potential competitors of cable believe that the cable industry is charging unfair license fees for its popular programs, making it impossible for them to sell low-priced packages. Cable's rivals also say that independent programmers -those not owned by the major cable operators - often refuse to license programs to them that they license to cable systems.

These are serious charges for the commission to scrutinize, inviting a look back at the commission's rules for permissible levels of market concentration - a fresh inquiry for the commission's fresh members.